Air Products Board Faces Shareholder Activism Amidst Succession Planning

Introduction

Shareholder activism has taken center stage at Air Products as the company's board faces pressure to address concerns over succession planning and overall corporate governance. A group of investors led by activist hedge fund Engine No. 1 has nominated four directors to the board, challenging the current leadership's vision for the company's future.

Succession Planning Concerns

At the heart of the shareholder activism is the issue of succession planning. Air Products CEO, Seifi Ghasemi, has been in his role for over a decade and is expected to retire in the next few years. The company has not yet announced a clear succession plan, leaving shareholders worried about the stability and continuity of leadership.

Engine No. 1 argues that the board has not adequately prepared for Ghasemi's departure and has failed to identify and groom a suitable successor. The hedge fund believes that the current board lacks independence and has been too complacent in its oversight duties.

Corporate Governance Issues

In addition to succession planning, shareholder activists are also raising concerns about Air Products' corporate governance practices. They allege that the board is dominated by insiders and lacks diversity, which limits its ability to make objective decisions.

Engine No. 1 has called for the board to be reconstituted with a mix of independent directors with expertise in key areas such as sustainability, digital transformation, and risk management.

Board's Response

Air Products' board has defended its record on succession planning and corporate governance. The board stated that it has been actively engaged in a comprehensive succession planning process and that a successor to Ghasemi is being identified.

The board also maintains that its composition is appropriate and that it has a strong track record of delivering value to shareholders.

Proxy Battle Looms

As the shareholder activism intensifies, a proxy battle is looming. Engine No. 1 has already filed a preliminary proxy statement with the SEC, outlining its proposals and soliciting votes for its nominees.

The outcome of the proxy battle will determine the future direction of Air Products and whether the company's board will face significant changes.

Conclusion

The shareholder activism at Air Products represents a significant challenge to the company's board and management. The concerns raised by Engine No. 1 highlight the importance of transparent and effective succession planning and strong corporate governance practices.

The proxy battle that is likely to follow will be closely watched by investors and analysts as it could have implications for the future of Air Products and the broader corporate governance landscape.